# Absorptive Capacity Stratification

**Reviewer Issue 3.4**: OECD restriction may look like cherry-picking.
We stratify non-OECD by institutional quality to test whether the mechanism
requires absorptive capacity, not OECD membership per se.

Non-OECD rule_of_law median: -0.401
High-RoL non-OECD: 84 countries
Low-RoL non-OECD: 83 countries

## Investment/GDP LP coefficient on log_predicted_demo_inflows

| h | OECD β | OECD p | Non-OECD High-RoL β | High-RoL p | Non-OECD Low-RoL β | Low-RoL p | Interaction β | Interact p |
|---|--------|--------|---------------------|-----------|-------------------|----------|--------------|----------|
| 0 | -1.6546*** | 0.0000 | -1.2848*** | 0.0027 | -0.0846 | 0.8679 | -0.8109*** | 0.0034 |
| 1 | 0.1071 | 0.7314 | -0.0784 | 0.8547 | -1.0850** | 0.0318 | 0.3718 | 0.1803 |
| 2 | 0.6917** | 0.0437 | -0.2269 | 0.5937 | 0.1321 | 0.7927 | 0.1360 | 0.6243 |
| 3 | 0.2045 | 0.5539 | 0.6251 | 0.1430 | -0.6514 | 0.1857 | 0.5452** | 0.0485 |
| 4 | -0.3329 | 0.3336 | -0.0452 | 0.9163 | 0.7933* | 0.0959 | -0.0756 | 0.7799 |
| 5 | -0.5454 | 0.1129 | -0.0952 | 0.8177 | 0.8217* | 0.0887 | -0.2200 | 0.4067 |

## Interpretation

At h=2: High-RoL non-OECD β = -0.2269 (p=0.5937), Low-RoL β = 0.1321 (p=0.7927)



## ASCII IRF Plots

```
Non-OECD High RoL → Investment/GDP
==================================

  h          coef       SE      p      N  Plot
  -          ----       --    ---    ---  ------------------------------------------------------------
  0   -1.28477***  0.42742 0.0027    756  -------------*--------------      |                         
  1      -0.07842  0.42815 0.8547    758                     --------------·--------------            
  2      -0.22687  0.42508 0.5937    760                   --------------·-------------               
  3       0.62506  0.42632 0.1430    761                                 --------------·--------------
  4      -0.04517  0.42942 0.9163    762                      --------------·--------------           
  5      -0.09517  0.41279 0.8177    759                      -------------·-------------             
                                          ------------------------------------------------------------
        -2.1225                                            1.4606
  (* p<0.05, o p<0.1, · p>0.1, | = zero)

Non-OECD Low RoL → Investment/GDP
=================================

  h          coef       SE      p      N  Plot
  -          ----       --    ---    ---  ------------------------------------------------------------
  0      -0.08457  0.50853 0.8679   1131                 ---------------·---------------              
  1    -1.08505**  0.50476 0.0318   1135  ---------------*---------------|                            
  2       0.13213  0.50254 0.7927   1138                    ---------------·----------------          
  3      -0.65143  0.49190 0.1857   1141         --------------·---------------                       
  4      0.79332*  0.47610 0.0959   1143                               ---------------o-------------- 
  5      0.82165*  0.48232 0.0887   1142                               ---------------o---------------
                                          ------------------------------------------------------------
        -2.0744                                            1.7670
  (* p<0.05, o p<0.1, · p>0.1, | = zero)

OECD → Investment/GDP (comparison)
==================================

  h          coef       SE      p      N  Plot
  -          ----       --    ---    ---  ------------------------------------------------------------
  0   -1.65463***  0.30187 0.0000    703  ---------*----------                |                       
  1       0.10712  0.31194 0.7314    703                              ----------·----------           
  2     0.69170**  0.34238 0.0437    703                                      |-----------*-----------
  3       0.20450  0.34535 0.5539    703                              ------------·-----------        
  4      -0.33285  0.34401 0.3336    703                      -----------·-----------                 
  5      -0.54542  0.34358 0.1129    703                  -----------·-----------                     
                                          ------------------------------------------------------------
        -2.2463                                            1.3628
  (* p<0.05, o p<0.1, · p>0.1, | = zero)

Interaction: demo_inflows × rule_of_law → Investment/GDP
========================================================

  h          coef       SE      p      N  Plot
  -          ----       --    ---    ---  ------------------------------------------------------------
  0   -0.81086***  0.27675 0.0034   2461  -------------*-------------     |                           
  1       0.37177  0.27736 0.1803   2466                              -------------·-------------     
  2       0.13603  0.27771 0.6243   2471                        --------------·-------------          
  3     0.54520**  0.27624 0.0485   2475                                  -------------*--------------
  4      -0.07559  0.27041 0.7799   2477                    ------------·-------------                
  5      -0.22000  0.26509 0.4067   2472                -------------·------------                    
                                          ------------------------------------------------------------
        -1.3533                                            1.0866
  (* p<0.05, o p<0.1, · p>0.1, | = zero)

```
